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Levy proposed to help tackle social care funding crisis

Posted on 27/06/2017 by


A levy on workers of around £360 a year would help tackle the social care funding crisis, a public services think tank has suggested.

Under the plans set out by Reform, based on a similar model in Germany, a compulsory insurance scheme would see working-age adults pay a monthly sum of around £30 on average.

That amount would be matched by employers under plans to meet the spiralling cost of social care, which is estimated to rise from £19 billion a year to £30.5 billion in 20 years' time.

Reform also backed some of the proposals set out in the controversial Tory manifesto plan to tackle the problem of social care funding, including scrapping the pensions triple lock and universal winter fuel allowance and raising more funds from housing wealth.

The deal signed with the DUP saw the Conservatives formally ditch plans to abolish the triple-lock protection for state pensions and means-test the winter fuel payment during this Parliament.

Even if the manifesto plans had gone ahead, Reform argued they would not have raised enough to deal with the crisis and a German-style insurance scheme was required.

Under the Reform proposal, working-age adults would save each month into a pooled Later Life Care Fund.

The think tank said the compulsory insurance scheme would see funds built up to pay for future social care costs, avoiding transfers of wealth between generations.

The long-run performance of pension funds suggests the cost of social care would fall by 18%.

The German scheme requires working-age adults to pay 2.55% of earned income in contributions and an equivalent levy in the UK would cost the average earner £30 a month, matched by their employer.

The report's author Danail Vasilev said: "The current crisis in social care will only deepen given the long-term pressures facing the system.

"Compulsory insurance is the radical action needed to pay for the growing ranks of people with social care needs."